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> FM does not guarantee most mortgages, What? Of course Fannie and Freddie guarantee the MBS they issue. Which is an implicitly a guarantee from the US governm

> FM does not guarantee most mortgages, What? Of course Fannie and Freddie guarantee the MBS they issue. Which is an implicitly a guarantee from the US government. Otherwise they'd trade at much wider credit spreads, which would in turn lead to higher rates for home buyers. You don't have to take my word for it, here's the New York Fed's own words: For agency MBS, the GSEs and Ginnie Mae promise full and timely payment of principal and interest, a guarantee that is either explicitly or implicitly backed by the federal government[1] > You want to tax homeowners as if they paid themselves rent? Alice, who has a 20% income tax rate, owns a house and rents it to Bob for $25k/year. Bob also has a 20% income tax rate, owns an identical house and rents it to Alice for $25k/year. In total the government collects $10k/year in tax revenue from Alice and Bob from their rental income. Now let's say Alice and Bob swap houses and move back into their owner-occupied properties. This is an economically identical situation (remember the houses are identical). Both still own one home. Both are still consuming housing that's worth $25k/yr to them. Yet the government collects no tax revenue. Exempting the implicit value of rent is a subsidy favoring owner occupied housing. > imputed rental value (which is likely not even legal) The IRS already taxes tons of benefits based on the imputed income, even if no cash changes hand. For example, if your employer provides you life insurance, you have to pay income tax on the actuarial value of the policy even if you don't die during the coverage period.[2] > then you will increase the cost of home ownership, Not if the supply of housing is completely inelastic. Any increase in housing taxes will result in a commensurate fall in the sticker price that matches the tax increase. Economists have known this since Henry George. [1]https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr1001.pdf https://www.newyorkfed.org/medialibrary/media/research/staff... [2]https://www.duq.edu/assets/Documents/benefits/_pdf/Imputed%20Income.pdf https://www.duq.edu/assets/Documents/benefits/_pdf/Imputed%2...

ChrisLomont 4y ago
>> FM does not guarantee most mortgages, >What? Of course Fannie and Freddie guarantee the MBS they issue Yes, they guarantee the MBS they issue, which is on a minority of all loans. The fact remains they do NOT guarantee most mortgages. They guarantee conforming loans, which are around 40% of all mortgage loans. And of all conforming loans, they only end up buying ~60% of them. So they at most guarantee around 24% of all mortgages, which is certainly not most mortgages. >Alice, who .... Ignoring the other side where landlords write stuff off and renters get tax breaks. On the ownership side, you're also missing lots of tax changes. So not identical. Also, the govt has an interest in property ownership as they have solid evidence that people owning property in a region make them less more stable. So there's very good reason to provide tax incentives for policy reasons. It's been shown that tax incentives, dollar for dollar, are pretty good incentives compared to most other forms of government spending to affect policy. >The IRS already taxes tons of benefits based on the imputed income, even if no cash changes hand. And they have tons the other way too - all because they desire to affect outcomes. So that they can do it is not really strong evidence to if they should do it, unless you address all the reasons they desire to do it. >Not if the supply of housing is completely inelastic. Which it is not [1]. "most areas that are widely regarded as supply-inelastic are, in fact, severely land-constrained by their topography" which is not most of the country. [1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1193422 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1193422
jjav 4y ago
> Exempting the implicit value of rent is a subsidy favoring owner occupied housing. When I go kayaking it costs me $35/hr for renting the kayak, which is income for the rental store and (presumably) they pay income tax on that. Except I don't really pay because I bought my own kayak so I get to go for free whenever. Your proposal amounts to abolishing the whole concept of property ownership.
pandaman 4y ago
>Both still own one home. Both are still consuming housing that's worth $25k/yr to them. Yet the government collects no tax revenue. Exempting the implicit value of rent is a subsidy favoring owner occupied housing. Why stop at rent? Alice cooks at home? Tax implicit cost of dining out. Alice goes shopping? Tax implicit delivery cost. Alice conceives a child? Tax implicit IVF cost. Alice gives birth? Tax implicit adoption cost. Alice dies? Tax implicit execution cost.

ChrisLomont 4y ago

>> FM does not guarantee most mortgages, >What? Of course Fannie and Freddie guarantee the MBS they issue Yes, they guarantee the MBS they issue, which is on a minority of all loans. The fact remains they do NOT guarantee most mortgages. They guarantee conforming loans, which are around 40% of all mortgage loans. And of all conforming loans, they only end up buying ~60% of them. So they at most guarantee around 24% of all mortgages, which is certainly not most mortgages. >Alice, who .... Ignoring the other side where landlords write stuff off and renters get tax breaks. On the ownership side, you're also missing lots of tax changes. So not identical. Also, the govt has an interest in property ownership as they have solid evidence that people owning property in a region make them less more stable. So there's very good reason to provide tax incentives for policy reasons. It's been shown that tax incentives, dollar for dollar, are pretty good incentives compared to most other forms of government spending to affect policy. >The IRS already taxes tons of benefits based on the imputed income, even if no cash changes hand. And they have tons the other way too - all because they desire to affect outcomes. So that they can do it is not really strong evidence to if they should do it, unless you address all the reasons they desire to do it. >Not if the supply of housing is completely inelastic. Which it is not [1]. "most areas that are widely regarded as supply-inelastic are, in fact, severely land-constrained by their topography" which is not most of the country. [1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1193422 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1193422

jjav 4y ago

> Exempting the implicit value of rent is a subsidy favoring owner occupied housing. When I go kayaking it costs me $35/hr for renting the kayak, which is income for the rental store and (presumably) they pay income tax on that. Except I don't really pay because I bought my own kayak so I get to go for free whenever. Your proposal amounts to abolishing the whole concept of property ownership.

pandaman 4y ago

>Both still own one home. Both are still consuming housing that's worth $25k/yr to them. Yet the government collects no tax revenue. Exempting the implicit value of rent is a subsidy favoring owner occupied housing. Why stop at rent? Alice cooks at home? Tax implicit cost of dining out. Alice goes shopping? Tax implicit delivery cost. Alice conceives a child? Tax implicit IVF cost. Alice gives birth? Tax implicit adoption cost. Alice dies? Tax implicit execution cost.